HYDRAULIC FRACTURING:

Calif. frack bill nears final passage even as greens cancel support

California legislation that orders the first-ever state oversight of hydraulic fracturing neared final passage yesterday, even after nearly all environmental groups dropped their support.

The state's Assembly on a vote of 48-17 approved S.B. 4 from Sen. Fran Pavley. It now heads back to the Senate for agreement on amendments. If ratified there, it goes to Gov. Jerry Brown (D), who has indicated he will sign it.

Pavley said the bill is needed because unlike at least 14 other states that produce petroleum, California doesn't regulate fracking or other well stimulation practices like acidization.

"There are still many unanswered questions about the use and impacts of fracking and acidizing," Pavley said. "It is in the interest of all Californians to monitor and regulate these practices. Ultimately, the oil industry, not the public, should be held accountable for the costs of these activities."

The bill sets up the rules under which the California Department of Conservation's Division of Oil, Gas and Geothermal Resources (DOGGR) will regulate fracking, where companies blast water laced with chemicals underground at high pressure to break apart rock formations and release oil or natural gas. S.B. 4 requires some disclosure on chemicals used and notification of residents before drilling starts and would create a system for testing groundwater.

The measure includes language that makes it apply to well stimulation and not just hydraulic fracturing. Industry has opposed that wording, but Pavley argues it is needed because some oil companies consider acid stimulation a possible key to opening the Monterey Shale. That swath of land, stretching from the middle of the state south to Los Angeles County, is believed to hold 15.5 billion barrels of recoverable petroleum.

Pavley aides called Assembly passage "a stunning victory for the public and the environment." But four major green groups that had led advocacy on the bill -- the Natural Resources Defense Council, the Environmental Working Group, the California League of Conservation Voters and Clean Water Action -- abandoned their sponsorship this week because of late amendments they found unacceptable.

"Until Friday, we strongly supported S.B. 4. Then these amendments came out of nowhere," said David Pettit, senior attorney at NRDC.

Some familiar with the politics said that Brown played a role in pushing the amendments that environmentalists oppose. Green groups say the language limits the reach of the California Environmental Quality Act protection law. Brown has called revising CEQA "the Lord's work."

"It was the governor's office that was insisting that those amendments go in in the first place," said Kathryn Phillips, director of Sierra Club California, which opposes S.B. 4. "As environmental groups and others were negotiating to get those amendments changed, it was with the governor's office that the negotiations were occurring. The governor's office was refusing to change them."

The governor's aides, Phillips added, "desperately don't want DOGGR to have to do environmental review of fracking sites, and so they worked really hard to make sure that new amendment in the bill wouldn't go away."

Brown spokesman Evan Westrup did not directly respond to questions about the governor's work on amendments but in an email said that "the administration has worked collaboratively with the Legislature to craft a bill that comprehensively addresses potential impacts from fracking, including water and air quality, seismic activity and other potential risks."

"S.B. 4 is an important step forward and the governor looks forward to signing it once it reaches his desk," Westrup added.

Brown previously has called fracking a "fabulous opportunity" (EnergyWire, May 15).

Split among green groups

Those familiar with the politics said that oil interests stopped lobbying against the measure after the latest amendments passed the Assembly on Friday. The oil industry trade group Western States Petroleum Association did not respond to a question about whether it had stopped asking lawmakers to vote against the bill.

Separately, WSPA President Catherine Reheis-Boyd said that the group opposes the measure.

"We have acknowledged the need to develop comprehensive and balanced regulations of hydraulic fracturing in California and had hoped S.B. 4 would provide those regulations," Reheis-Boyd said in a statement. "Unfortunately, S.B. 4 could create conditions that will make it difficult to continue to provide a reliable supply of domestic petroleum energy for California.

"Additionally, we are concerned the bill could make it difficult for California to reap the enormous benefits offered by development of the Monterey Shale formation in the San Joaquin Valley -- benefits that include thousands of new jobs, increased tax revenues and higher incomes for residents of one of the poorest regions in the nation," she added.

Green groups already had been divided on the bill. Sierra Club California and Physicians for Social Responsibility had opposed the measure, saying it lacked adequate protections. They objected to a provision that would block the public from knowing what chemicals companies are using if they claim the information is competitive.

In contrast, the Environmental Working Group, NRDC, Clean Water Action and the California League of Conservation Voters had earlier pushed for passage. They said that while the bill lacked some protections, it put other needed ones in place.

They withdrew support after the amendments were added Friday.

Green groups were troubled by a new clause that they believe could give oil companies a permanent exemption from CEQA. That law requires projects to produce an environmental impact report (EIR) addressing how the development will affect land, water, species and other factors, and as part of that to mitigate any adverse effects.

S.B. 4 requires DOGGR to conduct an EIR on how fracking and well stimulation activities will affect the entire state. The clause in question, Pettit said, gives a DOGGR supervisor the authority to approve a fracking project if he or she believes its potential impacts already have been investigated by that statewide review. The wording says that "no additional review or mitigation shall be required."

Pettit said that goes beyond the "negative declaration" that can be issued under CEQA, where an agency asserts that a project does not need to do an EIR because there aren't significant negative impacts. But when that happens, Pettit said, neighbors at least are notified and there is the chance to appeal in court.

'Free pass from CEQA'

Pettit said he is unaware of any other place in state law "that allows a government bureaucrat to waive CEQA with unfettered discretion." He added that "it's a free pass from CEQA for every fracking project in California forever."

An Assembly analysis disagreed with that interpretation. It said that "[t]his article does not relieve the division or any other agency from complying with any other provision of existing laws, regulations, and orders." Other state laws, like the California Global Warming Solutions Act and the Clean Water Act, still are in effect, it said.

Green groups also dislike language added to the bill Friday that puts in place a roughly 15-month grace period during which oil companies will be able to secure permits for fracking and well stimulation without going through CEQA.

"The amendments took a bill that didn't go far enough to protect Californians from fracking to one that actually gave away existing protections to oil companies," said Kassie Siegel, senior counsel at the Center for Biological Diversity. "Between now and 2015, Californians have less protections from fracking than current law provides."

Oil companies argue that hydraulic fracturing and other well stimulation processes have not been subject to CEQA. It is a point of contention that's part of a court case. The Center for Biological Diversity, EWG and Sierra Club filed a claim against DOGGR asserting that the state has failed to follow rules under CEQA that require the agency to track hydraulic fracturing.

Pavley, who authored the state's climate law, A.B. 32, in response to environmental group criticism said that S.B. 4 is a needed first step.

"I appreciate the support of the environmental community in advocating for the critical safeguards in S.B. 4," Pavley said. "I understand that many of their members desperately want a moratorium, and so do I. Since all the moratoria have died and companies are fracking and acidizing right now, I stand behind this bill as an insurance policy that does not prevent the governor or local communities from further restricting these activities.

"Without S.B. 4, there will be no public disclosure of chemicals, no groundwater monitoring and no regulation of acidizing, and the oil companies will continue to be able to frack without a permit or any public accountability whatsoever," she added. "The world won't be perfect if S.B. 4 passes, but it will be a whole lot better."

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